Swedish fintech firm Klarna has completed an $800 million funding round, taking its valuation to $6.7 billion. Despite the additional capital, Klarna’s valuation is still far below its valuation in June 2021. At the time when it raised $639 million last June, the fintech firm’s valuation was $45.6 billion.
The firm, known for its buy now pay later (BNPL) service, stated that the latest fund comes when the stock market is experiencing its worst period in decades.
The Round Attracted Several Previous And Incoming Investors
The latest funding round attracted several existing investors, including Commercial Bank of Australia, Silver Lake, Sequoia Capital, as well as Bestseller.
It also attracted new investors to the platform. These include Canada Pension Plan Investment Board and UAE’s sovereign investors Bubadala Investment Company.
Partner at Sequoia, Michael Mortiz, explained that the plummeting of Klarna’s valuation is basically because of how the investors have voted in the opposite direction compared to the way they voted in the past.
But Moritz believes that the phase is a temporary one as investors will soon turn away “from their bunkers”. When this happens, it will improve Klarna’s shares as well as the shares of other major firms in the industry.
Klarna Sets Eyes On The US Market
Klarna recorded a 38% increase in its net operating income to $1.6 billion in 2021. But the income has not been encouraging this year. As a result, the additional $800 million funding will be used by the firm to expand its position in the US. The payments and retail banking firm want to expand its operation in the region to improve its reach, which will eventually improve profit.
The US market is seen as one of the largest and most attractive for financial services companies, and Klarna wants to take the opportunity to announce its expanded presence in the country.
In line with its expansion move, the firm recently rolled out Klarna Kosma, a new business sub-brand to enable the firm to expand its open banking platform.
The Sweden-based fintech firm added that several conditions are affecting the growth of the company. Apart from the ripple effects of the Covid-19 pandemic, the firm highlighted the mounting fears of recession, rising interest rates, and inflation as some of the major concerns.
